- Last Updated on Wednesday, 13 May 2009 19:32
- Published on Wednesday, 13 May 2009 19:32
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Business Appreciation Week celebrates businesses of all kinds: large businesses, medium sized businesses, and small business. But it’s the small businesses that I think deserve a special recognition. The big businesses, and most of the medium sized ones, have enough capital, enough of a cushion, and of course the political clout, that though things are tough for them, they will probably weather economic storm.
However, small businesses are entirely different.
Their margins, the difference between having enough revenue, being able to make a payroll, and alternatively, not being able to pay the bills, is often surprisingly thin. And yet, small business keeps going. Even in tough economic times, individuals, partnerships, and small stock companies, fight the odds. Rather amazingly, even in tough times, entrepreneurs, people with an idea, a skill, or some special service, keep starting up businesses.
In America over half of the private sector workforce is employed by small business. But, here is a statistic that may really surprise you. According to the U.S. Small Business Administration as much as 75% of the high tech workforce is employed by a small business. Much of this is in information technology, but also includes small research firms and small scale high tech manufacturing. Companies like this, often with just a few employees aren’t at all uncommon in the Northern Neck.
Also, small businesses have a different footprint as opposed to larger scale enterprises. Over half are based at home. However, this is often a little more than running the family business out of the garage. Many consulting companies, not having the resources for a brick and mortar office, have begun to rely on “virtual” internet-based work structures. Of course, a host of small companies, particularly in construction and services, have been home-based for years.
Unfortunately, small businesses, whether it’s one of the many retail sales outlets in this area, or our many service and consulting companies, don’t have the margins that larger businesses have. What this means, is that when things get tight, they don’t have much to fall back on. Unlike the big banks, or the major car companies, no one is stepping in with billions of dollars in credit to keep them from failing.
Sometimes, the margins are awfully thin. A restaurant owner I was talking to last week was delighted that at last there was good weather and he had a weekend where business was strong. However, he said that it was getting so tight, that if he didn’t see a sustained increase in business he was going to have to start laying off waitresses and kitchen staff.
One of the sad realities for small business is that for the most part you’re on your own. And you face a host of obstacles. Just starting a small business can be a trial in itself. Sometimes it seems like the whole structure of government is operating with the goal of keeping you from getting started.
Employment rules are complex. Taxes and social security can be a bookkeeping nightmare. Rules and regulations, both state and federal all requiring this filing, or that impact statement, seem to come at you from all sides, and usually, for most small businesses, the owner is the one who has to cope with it all. Given all the taxes and governmental requirements it’s amazing that small business people ever find time to market their services and satisfy clients. But amazingly, in spite of all the requirements and all the challenges, small business remains the foundation of our American economy.
When our country was founded we were almost entirely a nation of small business owners. Usually, they were what we would today call single proprietorships. Men and women provided products, often hand crafted, as well as services, to a mostly rural economy. It was their spirit of independence and self reliance that fueled the American Revolution.
However, as our economy became more complex, businesses got larger, and so did government. The structure of our economy changed, but small business, from retail, to services, to restaurants, repair shops, and a host of enterprises too numerous to have any hope of naming in this space, thrived as well. Today, small business is under tremendous pressure. They are the first to feel the stress of a bad economy. But, amazingly, often on a month to month basis, they’re hanging in there. Surviving and providing, as they always have the very backbone of the American economy.
By David Kerr